£25million loan for new recycling and waste vehicle fleet

Loan for new Somerset waste and recycling vehicles

UP to £25M could be spent on bin lorries and other equipment as a new recycling scheme is implemented across Somerset.

Somerset Waste Partnership (SWP) is procuring a new contractor as it aims to roll out its Recycle More programme from 2020.

Council papers have revealed the six Somerset councils involved in the partnership could make a combined loan of £25M to a new contractor for vehicles, equipment and potential changes to waste depots.

New vehicles are needed to hold an increased volume of recyclable items and replace the existing ageing fleet.

The partnership has said the loan would lead to a cheaper contract, and that the money would be repaid by the contractor over the lifespan of the new vehicles.

The Recycle More initiative will lead to more items being able to be recycled through weekly kerbside collections, while in most cases household waste collections will reduce from fortnightly to once every three weeks.

Details of the proposed loan were published ahead of Somerset County Council’s cabinet meeting in Taunton on Wednesday (October 17).

Peter Lewis, the council’s interim director of finance, said that most of the four companies currently bidding for the contract has expressed an interest in such a loan.

He said in his written report: “As part of the new Recycle More service, there is a need to replace vehicles, equipment and potentially depots. The recycling fleet is nearing the end of its life in any event.

“The potential outlay is up to £25M. Most of those in the tendering process are interested in an arrangement whereby all the councils within the SWP fund the vehicles through Public Works Loan Body borrowing, in return for a discount to the contract price.

“A similar arrangement is already in place with the existing collection contractor [Kier].

“Provided that the contract discount offered is sufficient to cover the costs of borrowing… this would offer a relatively safe and almost immediate financial benefit to all councils willing to borrow.”

The Public Works Loan Board allows local authorities across the UK to borrow from the Treasury over long periods at relatively low interest rates.

The partnership has said that it was “unlikely” that councils would be asked to loan the full £25M, with the final amount depending on the chosen contractor.

The partnership is aiming to announce the winning bidder on March 14, 2019, with the first Recycle More collections taking place on March 30, 2020 and the scheme being rolled out across Somerset by 2022.

A spokesman said: “We are currently procuring for a new collections contractor, and part of that process tests whether it is better value for Somerset councils or the contractor to buy the fleet of recycling trucks needed for the new Recycle More service. New trucks are crucial to enable us to collect extra recycling each week.

“Councils can normally borrow at lower cost than companies – so our six council partners may borrow the funds needed to build new trucks.

“If we do, the councils will own the trucks and the new contractor can make use of them. That allows contract bidders to offer better value in lower costs, and all councils – and their council taxpayers – benefit.

“The councils pay back the loans over the useful economic life of the trucks, which is expected to be ten years. They will have their borrowing costs covered by the contractor, and make a saving from the lower contract cost.

“Many other local authorities follow exactly the same path for capital investment where contractors are involved, and this was the route taken by the partnership and its partner councils when the recycling truck fleet was last built almost a decade ago.

Ipsoregulated

This website and associated newspapers adhere to the Independent Press Standards Organisation's Editors' Code of Practice. If you have a complaint about the editorial content which relates to inaccuracy or intrusion, then please contact the editor here. If you are dissatisfied with the response provided you can contact IPSO here